Nvidia Corp shares have surged $1 trillion in two months as investors bet on further gains. The company’s recent earnings report addressed key concerns, including U.S. restrictions on advanced semiconductor sales to China and AI spending outlooks. Major clients like Microsoft, Meta, Alphabet, and Amazon drive over 40% of Nvidia’s revenue and are projected to spend $330 billion on AI infrastructure in 2026. Nvidia’s stock has climbed over 45% since April’s low, reaching a $3.4 trillion market value. Analysts are overwhelmingly positive, with an average price target of $170, implying a 24% gain. Despite risks from U.S. tariffs and reliance on China for 13% of Q1 revenue, deals with Middle Eastern governments and a strong product pipeline are expected to mitigate challenges.
Market Performance
Nvidia’s nearly $600 billion drop in value in January was part of a broader market reaction triggered by China’s DeepSeek, which caused a $969 billion loss in U.S. technology stocks. However, the company has since rebounded strongly. The stock trades at 29 times projected profits, below its decade-long average of 34, and its PEG ratio is the lowest among the Magnificent Seven.
Analyst Outlook
“Those questions have been answered in the positive for Nvidia,” said Thomas Martin, senior portfolio manager at Globalt Investments. “It’s time to ramp back up your ownership.” Samuel Rines of WisdomTree believes Nvidia’s price-to-earnings ratio could hit the high 30s or low 40s, stating, “We just haven’t seen any kind of slowdown in AI spending.”
The positive outlook is shared among analysts, with only one of 78 rating Nvidia a sell. Nvidia is owned by 74% of long-only funds, trailing behind Amazon, Apple, and Microsoft, suggesting potential for further investment. As CFRA Research’s Angelo Zino noted, “There were a lot of investors that really got out of this market prematurely and now they’re kind of being forced back into it.”
